(a)

1. (1)

   1. (A) The Arkansas Development Finance Authority (the “authority”) is charged with the responsibility of administering federal low-income housing tax credits (“housing credits”) for the State of Arkansas (the “state”).
   2. (B) The authority is also charged with the responsibility of promulgating rules concerning the allocation of the Arkansas low-income housing tax credit (the “state housing credits”) pursuant to Arkansas Code § 26-51-1701 et seq.
   3. (C) The Tax Reform Act of 1986 created the housing credit to encourage the private sector to invest in the construction and rehabilitation of rental housing for low-income and moderate-income individuals and families (I.R.C. § 42).
   4. (D) The Revenue Reconciliation Act of 1989 amended I.R.C. § 42(m) that requires allocating agencies to allocate low-income housing tax credits pursuant to a qualified allocation plan.
2. (2) Low-income housing tax credits shall be allocated in accordance with this plan and any amendments thereto and are set forth below.

(b)

1. (1) Qualified allocation plan. For purposes of this section, the term “qualified allocation plan” means any plan that:

   1. (A) Sets forth selection criteria to be used to determine housing priorities of the housing credit agency that are appropriate to local conditions;
   2. (B) Gives preference in allocating housing credit dollar amounts among selected projects to:

(i) Projects serving the lowest income tenants;

1. (ii) Projects obligated to serve qualified tenants for the longest periods; and

   1. (iii) Projects that are located in qualified census tracts, as defined in I.R.C. § 42(d)(5)(B)(ii), and the development of which contributes to a concerted community revitalization plan; and
   2. (C) Provides a procedure that the agency, or an agent or other private contractor of such agency, will follow in monitoring for noncompliance with the provision of this section and in notifying the Internal Revenue Service of such noncompliance that such agency becomes aware of and in monitoring for noncompliance with habitability standards through regular site visits.

2. (2) Certain selection criteria must be used. The selection criteria set forth in a qualified allocation plan must include:

   1. (A) Project location;
   2. (B) Housing needs characteristics;
   3. (C) Project characteristics, including whether the project includes the use of existing housing as part of a community revitalization plan;
   4. (D) Sponsor characteristics;
   5. (E) Tenant populations with special housing needs;
   6. (F) Public housing waiting lists;
   7. (G) Tenant populations of individuals with children;
   8. (H) Projects intended for eventual tenant ownership;
   9. (I) The energy efficiency of the project; and
   10. (J) The historic nature of the project.

3. (3) Application to bond-financed projects. I.R.C. § 42(h)(4) shall not apply to any project unless the project satisfies the requirements for allocation of a housing credit dollar amount under the qualified allocation plan applicable to the area in which the project is located.

   1. (c) Credit allocated to building not to exceed amount necessary to assure project feasibility.
4. (1) In general, the housing credit dollar amount allocated to a project shall not exceed the amount the housing credit agency determines is necessary for the financial feasibility of the project and its viability as a qualified low-income housing project throughout the credit period.

5. (2) Agency evaluation.

   1. (A) In making the determination under subdivision (c)(1) of this section, the housing credit agency shall consider:

      1. (i) The sources and uses of funds and the total financing planned for the project;
      2. (ii) Any proceeds or receipts expected to be generated by reason of tax benefits;
      3. (iii) The percentage of the housing credit dollar amount used for project costs other than the cost of intermediaries; and
      4. (iv) The reasonableness of the developmental and operational costs of the project.
   2. (B) Subdivision (c)(2)(A)(iii) of this section shall not be applied so as to impede the development of projects in hard-to-develop areas.
   3. (C) Such a determination shall not be construed to be a representation or warranty as to the feasibility or viability of the project.

6. (3) Determination made when credit amount applied for and when building placed in service.

   1. (A) In general, a determination under subdivision (c)(1) of this section shall be made as of each of the following times:

      1. (i) The application for the housing credit dollar amount;
      2. (ii) The allocation of the housing credit dollar amount; and
      3. (iii) The date the building is placed in service.
   2. (B) Certification as to amount of other subsidies. Prior to each determination under subdivision (c)(3)(A) of this section, the taxpayer shall certify to the housing credit agency the full extent of all federal, state, and local subsidies that apply, or that the taxpayer expects to apply, with respect to the building.
7. (4) Application to bond financed projects. I.R.C. § 42(h)(4) shall not apply to any project unless the governmental unit that issued the bonds, or on behalf of which the bonds were issued, makes a determination under rules similar to the rules of subdivisions (c)(1) and (2) of this section.